National Debt

Total outstanding borrowings of a Central Government comprising of  internal and external debt incurred in financing its expenditure. Internal Debt comprises of the debt collected from national creditors and External Debt comprises of the debt collected from foreign creditors.

National Debt is divided into 3 categories :

1. Floating Debt, short term  borrowings such as treasury bills, various ways-and-mean advances and borrowings from Central Bank.

2. Funded Debt, short term debt converted  into log term debt.

3.Unfunded Debt, national savings certificates, savings bonds, premium bonds and securities repayable in foreign exchange.

National Debt plays a crucial role in a country’s financial system as government securities form an important part of the reserves of its financial institutions.

 

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s